A federal Europe may be a pipe dream

At the whim of their leaders, more and more countries, beginning with Germany, are foregoing their projects for a federal Europe. But this is making room for some unique alternatives, such as a Club of Mediterranean countries or a Latino Union, notes the doyen of the Italian press.

Published on 31 August 2012 at 14:58

The game being played in Europe is very complex. Around the table, there are only four players: Italian President Mario Monti, European Central Bank chief Mario Draghi, the Bundesbank, the German Central Bank and German Chancellor Angela Merkel.

They each have their own strategy and alliances can shift as the game progresses. If the outcome is positive, the Italian and Spanish spread [the difference between their sovereign bond yields and those of Germany] will shrink, their sovereign debt will cost less to service and, mostly, it will result in a commitment that Monti can transmit to the government that will issue from the next elections, expected between November and April.

This commitment will have a very high value in the eyes of the markets and will re-enforce the positions of Mario Draghi and Angela Merkel against the Bundesbank hawks and the political forces that support them.

On September 6, the ECB governing council is expected to make a decision on the bailout plan. Monti, for his part, should announce his decisions in the following days. By the end of September, this problem should be definitively resolved.

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Towards a federal Europe

There is another, even greater, problem – that of the political and institutional context of this "unconventional" intervention by the ECB. It is the question of eventually moving away from a confederation of governments towards a federal Europe.

In other words, this consists of a "relinquishing of sovereignty" by national governments in favour of the federal bodies of the European Union. These include the already existing bodies that, in any case, will have to be reformed, as well as new ones that will undoubtedly have to be created in addition to the structures of the EU.

A few weeks ago it seemed that Angela Merkel was betting on the birth of a federal Union. French President François Hollande's position was not yet clear, but it was hoped that France would finally also recognise the need for this solution in a now globalised world.

If we bring it up again today, it is because there has been a new development: the idea of a federal Europe has vanished from the scene – the chancellor no longer talks about it – the question of the handover of sovereignty is now limited to the budget pact and the decision of the German Constitutional Court on the European Stability Mechanism (ESM) is imminent.

Even the feasibility of a banking union and of unified monitoring, not under the stewardship of the national banks, but entrusted to the ECB, is in doubt.

Getting back on track

In short, there is a clear withdrawal from a project that was, certainly, very difficult to implement in a continent divided by a wide variety of languages, ethnic groups and traditions but absolutely necessary if Europe is not to fall into total political insignificance. How can this back-pedaling be explained? And what is to be done to put this project back on track?

Angela Merkel has probably understood two things that she had neglected or under-evaluated a few months ago. The first is that a large majority of her people do not approve of a domineering Germany foisting policies on a Europe in which all member states, including Germany, would have to cede significant portions of sovereignty.

The Germans prefer to make profitable deals and to maintain their industrial and financial superiority over Europe but refuse to exercise a political domination that would imply considerable responsibilities and a partial renunciation of national independence.

The second regards the resistance of many other countries to the federal idea, beginning with France, the northern and the eastern countries – with those not in the eurozone, such as the United Kingdom and Poland – leading the pack.

The project, therefore, seems stuffed at the back of a drawer, apart from some relinquishing of sovereignty as concerns the European budget, some fiscal policies, defending the single currency, which, lacking the political context, will never have the strength required of a reserve currency.

Thinking the unthinkable

Abandoning this project, however, opens other avenues of negotiation and fosters initiatives that would otherwise be unthinkable. It allows, for example, those countries interested in a federal Europe to federate among themselves. The threat, bandied about in the past by Germany – "we are moving forward, too bad for the others" – when the talk concerned a two-speed currency union, could now, on the question of giving up political sovereignty, be used against it.

Should Italy, Spain, Portugal, Ireland, Austria, or just the first three of these, create or rather relaunch, a Mediterranean Club with its own rules and common institutions that would maintain a presence in the European Union and in the eurozone, not as individual states but as a club, the repercussions would far-reaching, even very far-reaching.

I pursue my example. What if the club countries established consultative and friendly economic and political relations with the other Mediterranean countries – Algeria, Morocco, Libya, Egypt, Israel, Turkey – relations that already exist but that would be embodied not by the countries that compose the club, but by the latter as a single partner?

What if, in addition, similar accords were signed with the entire Latino area of South and Central America, principally Argentina, Brazil, Uruguay and Mexico?

New horizons

Argentina and Brazil have already indicated their willingness to study and to establish relations of this type. Could not a Mediterranean club take the initiative in this direction?

If interests and imagination suggest new horizons, it is also possible for a federal Europe to get back on track. Dreams are sometimes a necessity in order to confront harsh reality.

I would like to mention one last point regarding a federal Europe.

Should it, sooner or later, come into being, it would then be necessary to implement some important institutional reforms:

1. The European Parliament must be elected on a European-wide and not on a national basis.

2. Referendums concerning European issues should be submitted to the vote of the European people and not to each of its member states.

3. The international structure of a federal union must be presidential, modelled on the United States, in which the president is elected and appoints a federal government; in which the parliament monitors government action including the appointments of high-level federal officials as well as laws regarding the budget, expenditure and receipts; in which there is a Constitutional Court to uphold the Federal Constitution.

When the state is the size of a continent, and what's more, in a globalised world, the role of democracy is to ensure rapid decisions, the visibility of the leader representing the continent, and citizen participation. The foundations of this edifice are based on the separation of powers.

These are clearly far away goals, but the people must be aware of them and must discuss them so as to prepare for their eventual attainment.


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